Beans led the way higher buoyed by a decent rally in soy meal that resulted with spot meal futures contracts higher on the week. Beans finished the week ten cents lower, while corn finished four cents lower. Wheat lost eight cents. Where to from here then? The sizable sell-off earlier in the week that was ignited by tariff saber rattling showed decreases in open interest Monday and Tuesday for beans and corn. Funds who were still net long meal, beans, corn and Kc wheat are most likely at or near neutral into the weekend given the price action in my view. While beans and meal bounced today those rallies were due to spread unwinding coupled with option expiration for July in my view. Unless we see near and long term forecasts turn hot and dry, and/or a relaxation of the tariff noise over the weekend, look for a lower opening for beans and meal Sunday into Monday. Corn likely would follow beans. I would caution shorts not to hold positions into next Fridays quarterly stocks and plantings report as a report day surprise would be that corn or bean acres would remain unchanged from the March report or even come in lower. Plus its month and quarter end. I look for a early week break and then a rally into the report. Anything is possible from the USDA. On the same note anything is possible regarding future tariffs and an increase in the rhetoric is a likely outcome in my view as the Trump administration is now threatening auto tariffs on the EU. The potential for China to be a non existent or tepid buyer of US soy down the road is the fear here and while that outcome for some seems unreliable, good weather and less demand equates to a surge in ending stocks should growing weather cooperate. The most prudent way in my view is for strangle here for soy going forward amid the uncertainty.
Buy 1 of the Jan 840 bean puts and sell 1 of the Jan 19 1120 calls for even money.
Buy the Jan 19/Nov 19 bean futures spread at 7 cents Jan 19 under. This spread settled at 1.6 under so I’m looking to buy a dip into next week.
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